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I'm not going to get into the question of whether the rich should pay more taxes or not. I just wanted to ask a few questions to clear some things up in my mind.

It does not seem fair that you should pay taxes on money that you're not getting. It sounds like you were paying taxes on your $150k salary, plus your 1/4 share of the business earnings an amount somewhere between $2 and $2.5 million during the last 5 years you were in the business. It's likely that your tax bill was more than your salary.

Did your company distribute the amount necessary to pay the taxes on the retained earnings?

So you're saying that you could not reinvest all of your earnings, only earnings minus the tax?

When you reinvest retained earnings, does that increase your basis in the company?

In most of these entities you are only able to take losses up to the amount of your basis. If the company later lost money or went bankrupt could you then have deducted the amount of your increased basis as a loss?

If the company builds up enough cash at some time, can it distribute this cash to its shareholders or partners essentially tax free up to the level of their basis in the company?

When you sell your company and calculate your capital gain, can you subtract the amount of your basis in the company from your share of the sale price?

Last edited by Buzz; 01-28-2011 at 11:28 AM.

"For everyone to whom much is given, of him shall much be required." -- Luke 12:48

ca doesn't pay taxes (mostly democrats) and they all think that higher taxes on the wealthiest Americans will solve their problems. There's also something like 45 million Americans on food stamps, social security is bankrupt and unemployment is probably north of 20% and they also think that higher taxes on the wealthiest Americans will solve their problems. So the democrats continue to play this class warfare game because it works with these voters. In fact, if you take away the democrats two best weapons (soak the rich and keynesian sodomy) their entire party would disappear. What good's a democrat if he can't spend someone elses money or even create it out of thin air?

Anybody watching Egypt? Seems like the 'folks' over there have figured it out and are taking action. Not a bad idea and it's coming to our shores soon enough and you can thank Obama and the Ber-nank. It would be nice to be able to follow what's happening over there more closely (and take notes) but the Egyptian government has turned off internet access, texting, etc. Obama wants one of them internet kill switches, too. Maybe he'll get it eventually but he's busy right now trying to outlaw guns. Those freaking bitter clingers.

We live in Cuba now.

ahhh, the old "half of america doesn't pay taxes" claim. please cite a source for this revelation.

social security is nowhere near bankrupt, and you know it. do you know anyone who has not received the benefit check that they were eligible for?

There are many sources that state at least 47% pay no federal income taxes. Those are 2009 numbers.
Even you can find that info with a simple google search.

I wonder if our tax system has anything to do with this?

Wednesday's Congressional Budget Office estimates indicate the government will have to borrow 40 cents for every dollar it spends this fiscal year, which ends Sept. 30. Tax revenues are projected to drop to their lowest levels since 1950, when measured against the size of the economy.

"For everyone to whom much is given, of him shall much be required." -- Luke 12:48

Sure and it is done by both sides of the aisle.
DINKS get slammed by the left and right.
Wish I could claim "my kids" as dependents! and get that nice per dependent under a certain age credit to boot.
4 four legged kids times 1000 credit would be nice.
Instead I pay to support someone elses human kids.
I pay insane property taxes because I have land for the dogs yet I use very little public services. NO schools etc.
The person down the street pays 1/5 my property taxes yet uses much more public services. They have 6 kids in school.